But economists said the market may have been overreacting.
"[E]conomic data rarely move in a consistent pattern ... we should not be surprised that there are bumps in the road," Joel Naroff of Naroff Economic Advisors wrote in a note to clients. "Unfortunately, investors want the latest data to always be better than the previous ones and that is unrealistic. Thus, they react wildly."
Naroff and other economists pointed out that a huge chunk of September's job losses came from the government and therefore, private-payroll losses weren't as bad as the headline number would make it seem.
"If, as I suspect, the October numbers turn out to be a lot better, we will all come back to the conclusion that the economy is moving out of the recession but the recovery is likely to be quite sluggish," Naroff said.
General Electric was the biggest percentage decliner on the Dow, off 3.8 percent, as the conglomerate continues talks with Comcast about whether Comcast will buy a 51-percent stake in GE's NBC Universal unit, which is the parent of CNBC. GE CEO Jeff Immelt said the company is mulling a partnership or IPO for the unit. Comcast said it hopes to reach a deal in 2 to 3 weeks.
Recovery-sensitive tech and industrial stocks were also depressed today, with Cisco, HP, Boeing and Caterpillar rounding out the Dow's bottom five.
Apple was among the few bright spots in tech today, up 2.2 percent after UBS upgraded its rating on the stock to "buy" from "neutral."
Shares of CIT Group soared 10 percent following news that the commercial lender is launching a debt-exchange plan in hopes of avoiding a bankruptcy filing.
Wal-Mart shares ticked higher after Chairman Rob Walton warned that the retailer would ride out what is expected to be a slow US recovery, while its Asian operations should do better.
First Solar, which is replacing Wyeth in the S&P 500, advanced 4.3 percent. Wyeth is being bought by Pfizer .
Pepsi rose 4.2 percent after Deutsche Bank raised its price target on the stock.
Crude oil futures , which have consistently tracked stock market movement, also tumbled after the US jobs report, ending the week at $69.95 a barrel. Gold closed out at $1,004.30 a troy ounce. And the dollar continued to retreat against major currencies.
Volume was average, with 1.4 billion shares changing hands on the New York Stock Exchange. Decliners outpaced advancers, roughly 2 to 1.
The week had started out strong, fueled by a wave of M&A activity, and logged their best quarter in 11 years. But it was all downhill from there, with Dow 10,000 talk fading and the index ending below 9,500.
Nine out of 10 key S&P sectors finished lower, with consumer staples the only one finishing higher. The biggest decliners were industrials, materials and energy.
Next week, investors will be keeping an eye on the dollar for any insight on which way stocks are going. Plus, we'll get readings on the services sector, which accounts for 70 percent of economic activity, and reports from major retailers on September sales. And, earnings season unofficially kicks off with a report from Alcoa on Wednesday.
MONDAY: Supreme Court meets; ISM services index; Fed's Dudley speaks
TUESDAY: IMF meeting; Fed's Fisher, Hoenig speak; Earnings from Yum Brands
WEDNESDAY: Weekly mortgage applications; weekly crude inventories; consumer credit; Earnings from Costco, Family Dollar, Alcoa
THURSDAY: Chain-store sales; foreclosure report; BOE, ECB rate decisions; weekly jobless claims; wholesale trade; Fed's Hoenig speaks; Earnings from Pepsi, Marriott, Chevron (interim)
FRIDAY: Market peak 2-year anniversary (Dow at 14,164.53); international trade
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